Thursday 18 / April / 2024
Muscat: The scope of lending by Finance and Leasing Companies (FLCs) in Oman has been expanded by the Central Bank of Oman (CBO) on Tuesday.
FLCs can now carry out additional business activities and these include real estate financing, working capital facilities, personal loans and lending against their own deposits.
The CBO further said that expansion of additional activities include relaxing certain conditions for their existing activities.
The CBO in its circular further said that the relaxations were extended to FLCs on conditions to accept corporate deposits, investments including discretion to change its business hours as per need of the market.
The CBO further added that these amendments aim to broaden the activities of FLCs and help in contributing positively to the development of the sector and the overall economy.
In its circular issued on Tuesday CBO said that FLCs are now permitted to extend personal loans to individuals that does not require collateral or security, subject to some conditions.
The loans are for customers with a monthly net salary of less than OMR1,000 where the maximum Debt Burden Ratio shall not exceed 50 percent of net salary.
For customers with monthly net salary equal to or exceeding OMR1,000 and those having repayment towards housing loan, the maximum Debt Burden Ratio shall not exceed 60 percent of the net salary.
Elaborating further, the CBO circular said that net salary referred herein, is the salary received by the customer in their bank account on monthly basis.
The tenor of the such personal loan shall not exceed seven years. It is permitted to allow a maximum of two monthly deferments per year, over and above the maximum tenure of seven years as per customer request.
FLCs shall take due care in determining overall debt burden by reference to such sources like bank statements, credit report from Mala’a (Oman Credit and Financial Information Centre).
The CBO circular further said that the purpose of the personal loan shall be non-business.
The top up of the personal loan shall be allowed, only after 12 months of satisfactory conduct of existing loan account or after 50 percent of the existing loan is repaid or when the loan was not fully availed as per his/her eligibility.
Age factor shall be considered appropriately. to ensure that repayment obligations can be met reasonably ahead of retirement.
The total personal loan portfolio (secured and unsecured) shall not exceed 50 percent of the total lending of the FLC, the CBO circular further said.
